EDITOR’S COMMENT There are some big numbers for real estate professionals across various markets to get their heads around in chancellor Rachel Reeves’ Spending Review. The early reactions – full disclosure, I’m starting to write this before the chancellor has finished speaking – suggest there needs to be a greater focus on strategy. Pound signs without a plan won’t do.
Take the £39bn earmarked to boost the provision of affordable housing, which the government has promoted as the biggest injection into social and affordable housing in half a century.
The capital grants will be directed over the next decade to local authorities and housing associations as well as private developers, aiming at unlocking thousands of homes secured through planning obligations but as yet unbuilt. The government has also confirmed a new 10-year rent settlement.
Justin Carty, executive director of residential investment advisory at CBRE, described the news as a boost for the sector and a “positive step forward”. But he emphasised that the hard work is far from done.
“The sector has faced a myriad of challenges that has seen affordable housing delivery, particularly in London, stall,” he added. “There are still significant planning and delivery challenges that developers are facing which need to be overcome to meet housing needs.”
Neil Kelly, head of land and development at Bidwells, also urged more comprehensive support: “The government should also look to provide more support across a range of tenure types to address the crisis at multiple levels. The reintroduction of a policy like Help to Buy, alongside Labour’s changes to the National Planning Policy Framework, offers real potential in terms of solving the housing crisis and accelerating delivery.”
Then there’s the £86bn of science and technology investment, which the government has said will be used to back “everything” from new drug treatments and better batteries to artificial intelligence.
As industry figures spell out, that money means less without a clear strategy and changes in other areas.
Richard O’Boyle, executive director at Pioneer Group, noted that even a seemingly “ambitious” headline figure simply maintains current funding levels in several areas. “Sustained impact will depend on more than just capital,” he said. “It needs talent pipelines and VISA reform.”
Kath Mackay, chief scientific officer at Bruntwood SciTech, added: “To fully realise the potential market opportunity and deliver on the UK’s ambitions to be the global innovation leader, the surrounding frameworks must also be in place to enable delivery at pace and scale. That is why this investment must work in conjunction with the joined-up, soon-to-be-announced, industrial strategy.”
The review is undoubtedly ambitious and signals a hoped-for era of growth. But while big pound signs will get the headlines, real estate will need to wait longer for a clear, long-term plan to match them.
Fresh thinking will be needed as new strategies are mapped out. Grosvenor’s James Raynor, who is also the chair of the Westminster Property Association, has some ideas.
This week Estates Gazette broke the news that Raynor and Adam Hug, leader of Westminster Council, have written to housing minister Matthew Pennycook urging him to loosen the rules around how local authorities access the Community Infrastructure Levy payments made by developers.
Specifically, the pair believe the funds should be made available for backing affordable housing.
“By updating CIL regulations and improving the process,” Hug and Raynor wrote, “the government can provide councils with the tools to foster thriving, sustainable communities and address the housing crisis head-on.”
Image © Colin Miller
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